Contractors State License Board Aims to Crack Down on Unlicensed Contractors


By Lauren Holappa

At its August 31, 2022, Quarterly Board Meeting, the California State License Board (CSLB) discussed how to address issues involving unlicensed contractors or the “underground economy.” According to CSLB, 18-20 percent of all consumer complaints received by the Board involve unlicensed contractors. In June 2022, CSLB surveyed 180 random online advertisements in Northern, Central, and Southern California. The survey revealed that 78 percent of ads did not provide a contractor’s license number. It is presumed these advertisers are likely unlicensed.

CSLB is taking action to protect consumers from the harms of unlicensed contractors. One of its goals is to return its undercover sting operations for unlicensed activity to pre-Covid levels. Before the pandemic, CSLB Statewide Investigative Fraud Team (SWIFT) averaged six or more undercover sting operations a month.

There has been particular focus on the Paradise area of Butte County as Camp Fire survivors work to rebuild. SWIFT and the Butte County District Attorney’s Office have paired up to be extra vigilant in detecting unlicensed contractors who are trying to take advantage of the situation. In September 2022, the two agencies collaborated in performing an undercover sting operation. Seven individuals were caught, three of whom face felony charges for contracting without a license in a declared disaster area. In addition to increased sting operations, on September 30, 2022 the Governor signed SB 216 (Dodd) (Chapter 978, Statutes of 2022). SB 216 takes effect on January 1, 2023, and will require workers compensation insurance for the CSLB contractor license classifications most likely to have employees (C-8/Concrete, C-20/HVAC and D-49/Tree Service). They will no longer be allowed to file an exemption. This regulation applies to all licensed contractors in 2026. [27:2 CRLR 97–98]

Lastly, CSLB also plans to retain outside consultants to determine the size of California’s underground economy in the construction industry and improve outreach to consumers about civil remedies available through Business and Professions Code section 7031.


One thought on “Contractors State License Board Aims to Crack Down on Unlicensed Contractors

  1. In 2013, the CSLB cited Linda Ellen Zale dba Zale Design Studio, CSLB Case No. S F 2013002729 and Citation No. 520151293, after being alerted to a pending civil action between Ms. Zale and Mark Leevan involving a remodeling project and independently investigating Ms. Zale’s work for Mr. Leevan. Ms. Zale appealed the citation but later settled with the CSLB for a citation for her unlicensed work and lesser fine. The CSLB did not have authority to order Ms. Zale to pay Mr. Leevan restitution. The District Attorney declined to pursue charges against Ms. Zale for both unlicensed contracting and her then suspected fraudulent invoices. The dispute between them arose after Mr. Leevan questioned Ms. Zale about some suspicious invoices. Instead of providing the backup for the invoices, Ms. Zale recorded a mechanic’s lien against Mr. Leevan’s residence and filed a civil action, Zale v. Leevan, County of Los Angeles, Case No. SC120709, even though she is barred from doing so pursuant to Cal. Bus. & Prof. Code Section 7031.

    Throughout nearly a decade of litigation, Ms. Zale denied her invoices were fraudulent only to admit on the second day of trial that some invoices were fraudulent and that she manufactured fraudulent invoices during the litigation to hide her earlier fraudulent invoices. Notwithstanding that the jury found Ms. Zale had engaged in fraud, both the Trial Court and Ms. Zale’s attorneys painted Mr. Leevan as a financial bully for both defending himself after being sued by Ms. Zale and pursuing legal relief he is entitled to under Section 7031 for Ms. Zale’s unlicensed activities. Throughout the litigation, the Trial Court provided judicial aid to Ms. Zale, including refusing to rule as a matter of law that Section 7031 barred Ms. Zale’s claims and defenses even though the Trial Court found that Mr. Leevan had met his burden of establishing that Ms. Zale had engaged in work requiring a contractor’s license. The Trial Court also provided judicial aid to Ms. Zale by creating a judicial exemption from the licensure requirement for work that is “incidental” to Ms. Zale’s core work, even though the Contractors State License Law caps unlicensed work, including materials, at $500. With jury instructions including this judicially created “incidental” exemption, the jury concluded that Ms. Zale did not engage in acts which required a contractor’s license, even though she hired and paid a window coverings company to install thousands of dollars in window coverings and another company to custom build and install a banquette, and awarded her $64,000.00 in contract damages and $59,195.23 in prejudgment interest, and the Trial Court awarded her $1,568,501 in attorneys’ fees.

    Mr. Leevan is appealing the amended judgment, denial of his motion for a new trial and judgment notwithstanding the verdict, and award of attorneys’ fees to Ms. Zale.

    On February 17, 2023, the CSLB confirmed that it was declining to submit an amicus brief on why it concluded that Ms. Zale violated the Contractors State License Law or why the Contractors State License Law requires individuals like Ms. Zale to be licensed contractors when they offer to perform and either self-perform or perform through others work requiring a contractor’s license.

    How is this taking action to protect consumers from the harms of unlicensed contractors? Who should submit an amicus brief if not the CSLB?

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